UK Court Orders Nigeria To Pay Chinese Firm $70m

The UK Court of Appeal has ruled that Nigeria is liable for a $70 million arbitration award in favor of a Chinese investor, Zhongshan Fucheng Industrial Investment Co. Ltd.

The Presiding Judge, Julian Flaux delivered the verdict on Thursday in response to Nigeria’s claims of state immunity to avoid paying the fine.

The dispute arose in 2010 when Zhongshan, through its parent company Zhuhai Zhongfu Industrial Group Co Ltd, acquired development rights for a free trade zone in Ogun state, Nigeria.

A year later, Zhongshan established a Nigerian entity called Zhongfu International Investment (NIG) FZE to manage the project under the approval of the Ogun state government.

However, tensions escalated in July 2016 when the investor accused the state government of abruptly terminating its appointment and attempting to install a new manager for the free trade zone.

Following the dispute, Zhongfu initiated an investment treaty arbitration against Nigeria under the China-Nigeria Bilateral Investment Treaty (BIT).

The arbitral panel found Nigeria in breach of its obligations under the BIT and awarded Zhongshan compensation of approximately $70 million.

In January 2022, Zhongshan sought enforcement of the arbitration award, but Nigeria claimed state immunity.

A high court judge, Sara Cockerill rejected Nigeria’s plea for immunity, stating that the country had abused the time frame for appealing arbitral awards.

The Court of Appeal, led by Judge Flaux, upheld Cockerill’s decision, highlighting Nigeria’s failure to with the time limit of two-and-a-half months to raise the issue of state immunity.

Flaux emphasized that Nigeria attempted to re-run the same arguments on state immunity that it had previously raised and abandoned before the arbitration panel.

The Court of Appeal dismissed Nigeria’s claim that there is a “point of general public importance” requiring court guidance, stating that there was no need to reopen the appeal to avoid real injustice.

“There is no question of it being necessary to reopen the appeal to avoid real injustice, and Nigeria cannot show that it has suffered any injustice from its application for permission to appeal being refused,” Flaux wrote.

In conclusion, the court held that it was not necessary to determine whether Nigeria was entitled to state immunity before making an enforcement order for the arbitration award in favor of Zhongshan Fucheng Industrial Investment Co. Ltd.